“The Most Impressive Failure Of His Time”
Notes From the Field By Simon Black September 30, 2022
Lately we’ve been led astray over and over again by supposed ‘experts’ with decades of experience who can’t seem to stop making colossal mistakes. But I’m not just talking about individuals. I’m talking about institutions too.
And one institution in particular that’s been an abject failure lately has been the central bank. That includes the Federal Reserve in the United States, the Bank of England in the UK, and more.
The Federal Reserve, for example, despite its leaders’ decades of experience, completely failed to predict that their policies over the past few years would have any consequences. It’s extraordinary.
These people honestly thought that they could print trillions of dollars, keep interest rates at 0%, and that there would never be any consequences until the end of time.
And then, when inflation began to take hold last year, they failed to recognize it. They chastised people who pointed it out.
Later, when they finally did acknowledge inflation, they insisted it was transitory. And then when they ‘retired’ the term transitory, they promised to do something about the growing inflation problem… eventually.
Finally, in March 2022, they made a very ceremonial 0.25% interest rate increase. File that away under “too little, too late”.
But now their tune has changed. Now their policies smack of panic and desperation, and they sound like they’re running around with their hair on fire with no clue what to do next.
It hardly inspires confidence.
Earlier this week we saw another example.
The Bank of England made a stunning announcement that they would step in to prop up their rapidly-declining bond market. Investors around the world cheered the news, and global financial markets surged.
The euphoria lasted about 24 hours.
The next day, markets tanked again as investors realized, “Hang on… I don’t believe these people.”
Central banks have enjoyed unparalleled respect and gravitas for the past 30 years; going back to Alan Greenspan in the 1990s, central bankers have been viewed as infallible superheroes who always know what to do.
Now they just look like a bunch of amateurs.
In today’s podcast, I walk through my analysis about what might happen next. Specifically, I argue why I think there’s NO WAY they’ll follow through on their interest rate increases. Simply put, continuing to do so will bankrupt their governments.
Ultimately this means that inflation, at least some inflation, is here to stay. And I also discuss a couple of key asset classes, plus one surprising country, that can do well in this mess.
To your freedom, Simon Black, Founder, SovereignMan.com
https://www.sovereignman.com/podcast/the-most-impressive-failure-of-his-time-37685/